A federal court has blocked a new rule that would have made an estimated 4 million more American workers eligible for overtime pay.
As a result of Tuesday’s ruling, overtime changes set to take effect Dec. 1 are now unlikely be in play before vast power shifts to a Donald Trump administration, which has spoken out against Obama-backed government regulation and generally aligns with the business groups that stridently opposed the overtime rule.
The U.S. District Court in the Eastern District of Texas granted the nationwide preliminary injunction, saying the Department of Labor’s rule exceeds the authority the agency was delegated by Congress.
“Businesses and state and local governments across the country can breathe a sigh of relief now that this rule has been halted,” said Nevada Attorney General Adam Laxalt, who led the coalition of 21 states and governors fighting the rule and has been a frequent critic of what he characterized as Obama administration overreach. “Today’s preliminary injunction reinforces the importance of the rule of law and constitutional government.”
Based on the ruling, employers do not need to comply with the new overtime regulations on Dec. 1 but should remain prepared to do so in the event the decision it is modified or overturned, according to Dayton attorney Robert Dunlevey.
“Most importantly, in the last several months, I have met with numerous employers in order to ensure compliance with the new regulations. This exercise confirmed that many employers had misclassified employees as exempt under the previous regulations,” said Dunlevey, who is a board certified labor and employment law attorney.
Dunlevey said employers should not delay in reclassifying employees previously misclassified, adding it’s estimated that 70 percent of employers are in violation of federal wage-hour laws.
The regulation sought to shrink the so-called “white collar exemption” that allows employers to skip overtime pay for salaried administrative or professional workers who make more than about $23,660 per year. Critics say it’s wrong that some retail and restaurant chains pay low-level managers as little as $25,000 a year and no overtime — even if they work 60 hours a week.
Under the rule, those workers would have been eligible for overtime pay as long as they made less than about $47,500 a year, and the threshold would readjust every three years to reflect changes in average wages.
The Department of Labor said the changes would restore teeth to the Fair Labor Standards Act, which it called “the crown jewel of worker protections in the United States.” Inflation weakened the act: overtime protections applied to 62 percent of U.S. full-time salaried workers in 1975 but just 7 percent today.
The agency said it’s now considering all its legal options.
“We strongly disagree with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans,” the labor department said in a statement. “The department’s overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule.”
The Associated Press contributed to this story.
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